Howes: In EV battles, automakers’ moves outpace market

Daniel Howes
The Detroit News

Electric vehicles may not be lighting up American consumers, but that’s not stopping automakers from stepping on the gas.

The Alliance of Auto Manufacturers is using this week’s New York International Auto Show to launch a “Buyers Wanted” campaign, targeted primarily at would-be EV customers in the northeast. Jaguar Cars is touting its I-Pace electric crossover, soon to be rolling in the autonomous vehicle fleet of Waymo, a unit of Google parent Alphabet Inc.

And Germany’s heaviest heavyweights, Daimler AG and BMW AG, are combining forces to take on Uber Technologies Inc. and provide mobility services — many of which are likely to be delivered by EVs. The reason, Daimler CEO Dieter Zetsche says, is that “pioneers in automotive engineering ... will not leave the task of shaping future urban mobility to others.”

That’s one way to put it. Another would be to recognize the invisible hand guiding decision-making inside most of the world’s top automakers. It’s government, and aggressive regulations arguably disconnected from market demand and longer-term trends in energy prices.

Ten states, including eight in the northeast, have rules mandating that 15.4 percent of vehicles sold there by 2025 be zero-emission vehicles, or ZEVs. That’s an audacious goal considering a) that’s only seven years away for a market b) increasingly enamored with pickups and SUVs because c) longer-term energy prices put gasoline closer to $2 a gallon instead of $4.

ZEVs last year accounted for 1.15 percent of sales nationwide, the Auto Alliance says. Of those, 50.1 percent were plug-in gas-electric hybrids, 48.7 percent were battery-electrics and 1.2 percent were fuel cells, totaling 197,715 vehicles. Total U.S. sales in 2017: 17,134,733.

Welcome to the Great Auto Disconnect. Consumers mostly aren’t buying the electric future the industry is selling and the government is decreeing. Even the purchasing practices of ZEV-mandate states, led by California and its all-powerful Air Resources Board, aren’t embracing that future, either — at least not in the kind of numbers that would suggest seriousness about ZEVs.

Last year, only California, New York and Oregon exceeded the national sales rate for ZEVs in their purchases of state-owned vehicles, with California’s 4.03-percent ZEV share of its state-owned vehicles being the highest. The remaining seven, according to figures compiled by the Alliance from data provided by IHSMarkit, bought fewer ZEVs for their respective state fleets than the national average.

In the annals of governmental “do as I say, not do as I do,” this would certainly qualify. And the hypocrisy is likely to intensify when the Trump administration’s Environmental Protection Agency as early as this week issues revised fuel-economy targets for 2025. The incentives to go electric will go down, not up.

“The last thing we want to see is an EV sitting unsold on a dealer’s lot,” Alliance CEO Mitch Bainwol said in a statement Wednesday. “We are proud to offer more than 50 EVs on sale now, with more coming, and we support all efforts — education, consumer incentives, more charging stations, more state fleet purchases — to get these vehicles on the road.”

Of course they do. Despite their torquey performance and environmental halo, EVs are flooding showrooms in greater numbers amid comparatively cheap gas and rising demand for larger, more flexible vehicles. And a spate of scary stories (see the latest Tesla accident after its lithium-ion batteries caught fire or the fatal Uber crash in Arizona) doesn’t help the cause of EVs or autonomous vehicles.

Don’t underestimate the power of the familiar, of established infrastructure, of automotive technology that evolved over the past century to become a cornerstone of contemporary culture. It all matters.

Look, this isn’t to argue that electric vehicles will “never” gain traction with American consumers — or German or Chinese or Indian. Never is a long time; macro-economic conditions change; and technology marches on, generally getting safer, more reliable and less costly.

Battery costs are dropping, as Morgan Stanley reminds in a note Wednesday, making electrics a more viable choice for some. Ride-sharing services enabled by smartphones, especially in large, congested urban areas, grow more popular, even if the vast majority of rides are powered with gasoline.

And American market proclivities increasingly are not the rule in the globalizing auto industry. Their yen for large pickups and SUVs is the exception, even as the love for car-like crossovers of all sizes is a trend shared in many markets around the world.

Electrics can change that calculus. But it’s more likely to happen slowly — after the technology and performance catch up to the hype.

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Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.